As we head into a new administration, and policy shifts begin, it is probably a good idea to discuss how government policies affect the economic landscape we see around us. President Biden, as a Democrat, sees a strong role for government in managing the national economy. To be honest, so did Trump and his Republican allies. The only real difference would be the degree of government interference or “investment” and where that interference occurs, rather than whether the government has a role in managing the economy at all. Unfortunately, most politicians are adherents of the Keynesian school of economics, whether they know it or not.
Keynesians believe that the government has a role in managing the economy through currency manipulation to boost economic output, spending and investment via central bank policies like “quantitative easing” that drive down interest rates, but increase inflation, or government redistribution of money to preferred economic sectors like “green” energy subsidies, and infrastructure spending. The belief is that these policies help stimulate economic growth, quantitative easing, by maintaining artificially low interest rates to promote personal debt spending, and “investment” by directing funds into what the government feels are necessary or preferred areas of the economy.